3/12/2009 @ 1:40PM

Une Affaire de Famille

The unhappy fallout between Europe’s richest woman and her daughter–and the man in the middle.

Liliane Bettencourt, the richest woman in Europe (with $13.4 billion), has led a secret life. Sometimes, the 86-year-old heiress of the L’Oréal fortune would head off in her car from the family mansion in Neuilly, the prosperous Paris suburb where President Nicolas Sarkozy served for many years as mayor. The chauffeur’s instructions were to tell no one–”least of all Monsieur Bettencourt,” he told a French public prosecutor in a recent sworn statement.

Once on the road, she told him to drive to Trocadero, the esplanade on Paris’ Right Bank overlooking the Seine and the Eiffel Tower. There they picked up a passenger, the celebrity photographer, François-Marie Banier, 61. He was not her lover, at least not in any conventional sense, but her dear friend, perhaps the dearest person in the world to her. They drove to an address on the grand Avenue Georges Mandel in the 16th arrondissement. They had been to that address before, and they would go again frequently. It was the office of Banier’s notary.

The chauffeur doesn’t say what went on behind the notary’s closed doors, but no one disputes what brought these three people together over a couple of years, starting in 1998. Bettencourt was giving Banier money, and the notary was making sure the paperwork was correct.

According to a complaint filed by Bettencourt’s daughter, Françoise Bettencourt-Meyers, 55, the gifts started modestly, and then a trickle of largesse turned into a geyser. In 2002 Madame Bettencourt gave Banier $14 million; a year later, $315 million in the form of a life insurance contract of which he is the beneficiary; in 2004, $7.6 million; in 2005, $71 million. On Madame Bettencourt’s walls in Neuilly are nine masterpieces, worth a combined $30 million or more, by Picasso, Matisse, Mondrian, Léger and others. They will go to Banier after she dies. According to the public prosecutor, Madame Bettencourt gave her good friend $1.3 billion in all, leaving him in the neighborhood of $630 million after taxes.

Bettencourt-Meyers, Liliane’s only child, watched this cash-fueled friendship with mounting alarm from her villa in Neuilly, not far from her mother’s. In a sense, it was her money that was bleeding out. But Madame Bettencourt had already agreed to leave her 30% stake in L’Oréal, representing most of her wealth, to her daughter, retaining only the dividends of some $320 million a year from it. The wound was likely more emotional than financial.

In November 2007 Françoise’s father, André, died at 88, and a few days later she got wind that Banier had pushed to get himself adopted as Madame Bettencourt’s son. Liliane has denied it, but even adoption wouldn’t have altered the inheritance, which is very to difficult to change under French law. Still, for Françoise it was the drop that makes the whole glass spill over, as the French say.

A month later Bettencourt-Meyers lodged a criminal complaint, accusing Banier of abus de faiblesse–taking advantage of her mother’s mental frailty–to line his pockets and make her mother an emotional hostage, isolating her from her family and friends. A prosecutor launched a broad investigation, the details of which are sealed. This reporter was allowed to view portions of the police file for the complaint, including affidavits from former employees of Liliane Bettencourt. (Bettencourt, Banier and Bettencourt-Meyers decline comment.)

The complaint makes much of the fact that the two biggest life insurance policies were signed over in 2003 and 2006. Both times Madame Bettencourt had only recently emerged from hospital stays for back pain and dehydration and was at her most vulnerable. Her daughter maintains she doesn’t care about the money but wants a court-appointed guardian to oversee her mother’s interests. Abus de faiblesse is tricky to prove even with the purported victim’s cooperation. In this case, however, Liliane Bettencourt is doing everything she can to close the books.

On Nov. 5 she paid a visit to the Elysée Palace to ask her old acquaintance President Sarkozy to make the case go away. No one has seen any signs of presidential interference, but no one doubts either that the Elysée is looking over everybody’s shoulders. (The Elysée did not respond to repeated requests for comment on the story.) “It’s a very delicate matter,” says one of the police investigators. “The stakes go way beyond the immediate circumstances.”

The friendship as depicted by testimony attached to the complaint sounds nightmarish. “Their discussions were practically always about money, and if Madame Bettencourt resisted his demands even a little, he flew into terrifying fits of rage,” said one of Liliane Bettencourt’s nurses.

His only leverage was his presence in her life, but, apparently, that was leverage enough. On vacation in the Seychelles, Banier once again insisted Bettencourt bring out her checkbook, a housemaid recalled. This time Bettencourt said no. Banier declined to join her for lunch and dinner. Abject and miserable, she soon cracked.

“A withdrawal like that could be devastating when you’ve come to rely on that person emotionally for years,” says T. Byram Karasu, chief psychiatrist at Montefiore Medical Center in New York City. “You would do just about anything to keep that person.” A specialist in rich people’s problems, Dr. Karasu says he’s very familiar with the special bond that wealthy older women frequently forge with younger gay men, an intimacy without the threat of sexuality. Think of Doris Duke, who left her entire fortune to her gay butler, Bernard Lafferty; and Barbara (Babe) Paley, patron of writer Truman Capote. “What is exchanged is attention for money,” he says. “Very often, these are the children the older woman would like to have had. It can be a very loving, authentic relationship but all the emotional power is unquestionably with the gay guy.”

On Dec. 21 Liliane Bettencourt delivered her one public utterance on the subject in an interview she gave Le Journal du Dimanche. She used it for a bristling display of fortitude and defiance, but she didn’t exactly shoot down Dr. Karasu’s analysis, either. “I can’t understand what fly bit my daughter,” she said. “Maybe jealousy. My daughter is rather introverted, and someone who puts himself out there like François-Marie Banier, well, it might be very annoying. She always had a better relationship with my husband [than with me].” As for Banier’s acting the money-mad predator? “You think he could have gotten me under his thumb just like that?” Madame Bettencourt asks. “First of all, I never sensed that he even tried. Is he self-interested? Everybody in the whole world is self-interested,” she says, adding, “He’s an artist and that motivates me. What I gave him, even if it’s a lot, isn’t that much in proportion to my total wealth.” Any rumors about her adopting Banier are absurd. “What do you want me to do with a 60-year-old son?” Luckily, she says in the interview, she has a sense of humor about all this. Except when it comes to her child: “I no longer see my daughter, and I have no desire to.” For his part, Banier denies any wrongdoing.

Liliane Bettencourt met Banier in 1987 at a photo shoot for a magazine called Egoïste. He was captivating, artistic and witty. As a teenager he had walked away from a brutalizing father and a seductive mother in the comfortable 16th arrondissement that borders the Bois de Boulogne, skewering them afterwards in a handful of very good novels. “He’s very funny, very mean, and he knows everybody,” says the writer Jean-François Kervéan, who has known him for years. “He can be venal, but he can also say beautiful things about Picasso and Beckett.”

Banier’s impertinent charm didn’t work on everyone, but it worked on an impressive list of artists: Salvador Dalí, Yves Saint Laurent, Samuel Beckett, Vladimir Horowitz. It worked like crazy on a clutch of grandes dames who helped pave his path forward in one way or another long before he met Liliane Bettencourt.

He started taking photographs, mostly celebrity portraits, some of which he embellished by scribbling on them and which reportedly sold for as much as $100,000. The noted antiques dealer and decorator Madeleine Castaing fell hard for him and bought a number of these early works, launching his career as a photographer. She was 75 and he was 22 at the time. “He has this aura, this magnetism that attracts success,” wrote the French diarist Matthieu Galey in an unblinking portrait of Banier in 1982.

Back then Banier lived on the Rue Servandoni, across the street from the Luxembourg Gardens, in a lovely book-filled atelier done in warm red fabric that he shared with the great decorator Jacques Grange. As the years went on and more money came his way, Banier kept buying adjacent apartments. By 2004 Liliane Bettencourt’s chauffeur was dropping Banier at a second entrance around the corner on the Rue de Vaugirard; Banier’s expanding apartment eventually expanded out the other side of the building. He shares his lavish quarters today with the actor Pascal Gregory and Gregory’s 35-year-old nephew, Martin D’Orgeval. “Money in the bank is like a shameful disease in my family,” Banier told Vanity Fair in a 2006 profile. “Every time I get an advance from a book or sell a photograph, I buy a work of art, or another apartment in my building, or some land around my country house near Nîmes.”

Was he really that flush? “At the end of 2005 Monsieur Banier telephoned me practically every day on my portable phone to tell me I absolutely had to tell Madame Bettencourt that he loved her, that he cared deeply for her, but that he needed 2 million to 3 million euros [$2.5 million to $3.8 million] to pay for a swimming pool and other renovations in his Paris apartment.” That’s the sworn recollection of Madame Bettencourt’s personal accountant at the time, one of roughly a dozen similar recollections in the complaint, portions of which were published in the French magazine Le Point in December.

The witness statements are there, of course, to make a case for the complainant. “I just can’t square the idea of the Banier I know with the one I read about,” says Josyane Savigneau, an editor at Le Monde and an old friend. Weight them as you will, the witness accounts make creepy reading:

–”Over the course of several years, when Madame Bettencourt went to meet Monsieur Banier at a restaurant for lunch, he would call to ask if I was sure she had put her checkbook in her purse,” recalls a former maid.

–After lunch at Le Grand Vefour, Madame Bettencourt paid the check. “I saw in the ceiling mirror that Madame opened her handbag on the banquette and [Banier] took out the envelope containing 10,000 francs, paid and put the envelope in his jacket pocket,” says a former chauffeur.

–”I remember Monsieur Banier asking me my opinion when I bumped into him on the property. He said, ‘Claire, I’d like to go see Françoise Bettencourt-Meyers to tell her that there’s enough money for the two of us.’ I was dumbfounded, but he kept going, asking me if I realized that we had to clean out Tethys [the holding company for the Bettencourt L'Oréal shareholdings] and the safe deposit boxes where Madame Bettencourt kept her jewels,” says a former accountant.

Everyone close to the affair eventually trots out the word “romanesque,” and it all does belong in a French novel, but which one? The main characters aren’t helping to pin down the plot line. For now they’ve all pretty much gone underground, leaving the narrative to leakers and loyalists. “This is not like a murder,” says one of the investigators. “It’s all shades of gray, not black and white.”

The complaint sits on the desk of Philippe Courroye, chief prosecutor in the Paris district of Nanterre. Some people insinuate darkly that that’s where the powers that be want it to stay. “No one has any vested interest in shaking up the status quo,” says a lawyer connected to the case.

Courroye recently designated a renowned neuropsychologist to examine Madame Bettencourt. But she won’t let him near her and there’s nothing anybody can do to compel her. The logical next step is for Courroye to kick the whole affair upstairs to a juge d’instruction, who has greater authority to reach a finding, send a case to trial, or even dismiss it. Yet there are complications in this instance.

In 2004 the Bettencourt family made a pact with Nestlé, L’Oréal’s second-largest shareholder with around 30%. Neither can sell their stakes until April 2009. Nestlé can’t buy out the Bettencourt holding while Liliane is still alive, but it can sell its own shares, perhaps even to a non-French company with designs on this French crown jewel.

A tarnished jewel. L’Oréal’s 2008 profit fell 27% to $2.4 billion, and at least one analyst argues that Nestlé should get out pronto. Liliane Bettencourt sits on L’Oréal’s board, but she has little involvement in its business affairs. One investigator mentions the possibility that angry shareholders could launch a flotilla of lawsuits if Madame Bettencourt’s judgment was found to be compromised during her tenure on the board. All this in the wake of revelations that she lost an undisclosed amount of money in a fund overseen by René-Thierry Magnon de la Villehuchet, who committed suicide after losing $1.4 billion to Bernard Madoff.

The Brigades Financières, the financial investigative arm of the national police, recently broadened its inquiry to examine Banier’s past friendships with powerful women like the late Madeleine Castaing, aristocratic fashion arbiter Marie-Laure de Noailles and literary lioness Nathalie Sarraute. Were they victims?

One of Banier’s best-known photographs is a portrait of Castaing when she was 95. He managed to pose her on the staircase of her building, in a nightshirt and without her wig. It is a cruel picture, and a sad one, too. “Yes, there, she was abused”–emotionally–”and in the worst possible way,” her grandson Frédéric told Le Figaro in February. He has no plans to join forces with Françoise Bettencourt-Meyers, however. “These aren’t really judicial questions,” he said. “The essential truth lies elsewhere.”